Iran's leader orders 'economy of resistance' to counter sanctions

Feb. 8, 2014: In this photo released by an official website of the Iranian Supreme Leader's Office, supreme leader Ayatollah Ali Khamenei makes a speech to military members in Tehran, Iran.
(AP/Iranian Supreme Leader's Office)

TEHRAN, Iran – Iran's top leader ordered the government Wednesday to create an "economy of resistance" to counter sanctions imposed over Tehran's nuclear program.

Ayatollah Ali Khamenei called Western sanctions "a full-fledged economic war" and said Iran is determined to force the West to retreat.

Iran has been hit hard by sanctions that have hit, among other targets, its vital oil sector. The program requires the government to diversify Iran's exports, reduce dependence on sales of raw materials and promote knowledge-based high-tech industries.

"If (Iran) pursues ... an economy of resistance, we will overcome economic problems and will defeat the enemy ... that has imposed a full-fledged economic war against this great nation," he said in his order which was posted on his website leader.ir.

Under the program, the government must take action to expand production and export of knowledge-based products, increase domestic production of strategic goods and develop markets in neighboring countries. It also encourages greater privatization and increased exports of electricity, gas, petrochemical and oil by-products instead of crude oil and other raw materials.

Iranian officials say it will be harder to target oil byproducts with sanctions than it will be to target crude.

Western sanctions over Iran's nuclear program also shut Iran out of the international banking system, making it hard for its remaining customers in Asia and elsewhere to pay.

An interim nuclear deal reached in November with world powers has eased some sanctions but the core remains in place — including measures targeting Iran's oil exports, the pillar of its economy.

Crude oil exports account for nearly 80 percent of Iran's foreign revenue but have been reduced by half in the past two years due to stepped up sanctions. It currently exports about 1 million barrels a day — compared to 2.2 million in 2011.

Iran says its non-oil exports have increased to about $40 billion a year, showing an annual 20 percent increase.

Iran and the six-nation group — the five permanent members of the U.N. Security Council plus Germany — began talks for a final deal in Vienna Tuesday.

Khamenei, who has the final say on all state matters in Iran, has said he had accepted the talks but doubts they will succeed, saying Washington is using the nuclear issue as an "excuse" to pressure the country.

In his order, Khamenei has asked the government to closely monitor sanctions and impose costs on the "enemy," a reference to the U.S.

The West suspects that some Iranian nuclear activities are intended to give it the ability to build a weapon. Iran denies this, saying its program is for peaceful purposes.